One of the more interesting aspects of the RDR’s implementation over the past two to three years has been the changing attitude of financial advisers towards the new QCF Level 4 requirement.
Actually, I’d better rephrase that: it’s less a case of a change in attitude than a dawning realisation that QCF level 4 has turned out to be nowhere as difficult to achieve as many advisers thought might be when the idea was originally proposed by the FSA.
While many IFAs still resent having been made to study for and sit a whole series of new exams, the vast majority have been able to pass them with ease. The result is that, albeit reluctantly, advisers are now better-qualified.
What is more, quite a few who initially opposed the RDR’s qualification requirement have contacted me to say they feel proud at having passed their exams. They feel, dare one say it, more professional as a result.
So why is it, that at a time when IFAs have finally succeeded in creating a level playing field between themselves and the banking industry, some are now prepared to allow it back in to eat their lunch?
That has to be the only conclusion one can draw from a proposal, originally made by the ABI and the Association of Mortgage Intermediaries last month, for a “basic advice plus” regime that would allow salespeople with a QCF Level 3 qualification to sell a suite of “simple” products, such as protection.
To justify their call, they point to the report in August by the Government’s independent steering group, chaired by former Lloyds Bank head of risk Carol Sergeant, which recommended a few basic financial products should be made available to consumers.
Sadly for them, Carol Sergeant’s report said nothing about multiple products. Its key recommendations were for an easy access savings account, a 30-day notice account and a simple term life insurance product, as well as kitemarking to ensure these products are identifiable to consumers.
Undaunted by this minor problem, in support of their proposals the ABI and AMI are throwing into the argument the names of every organisation and individuals who have ever had a thought vaguely akin to their own over the past decade or more.
Hence the namechecks by AMI director Rob Sinclair of “Ron Sandler, the basic advice regime, Mifid in its current and future incarnations and the thoughts in IMD II and Prips.” Not forgetting the humble kitchen sink, of course.
To justify this line, they talk about “the social issues of a pensions time-bomb, the recognised saving and protection gap and the loss of mass-market advice to middle income groups by the closure of the tied advice arms of most of the major banks.”
Yet it is not clear in Sinclair’s paean to basic advice how it would solve the problems he outlines. Presumably, Carol Sergeant’s term assurance proposal would take care of some of the “protection gap” he refers to. What other protection products does he have in mind? Is there evidence in the past decade of bank salespeople successfully bridging any remaining gaps, with or without the QCF Level 4 qualifications they currently don’t have?
As for his reference to a “pensions time bomb”, it comes at the same time a government’s launch of auto-enrolment. I accept that auto-enrolment is not the full answer to people’s potentially dire long-term retirement incomes.
Yet somehow Sinclair imagines that his “middle income groups”, unhappy at the fact that they are facing deductions from their income, unconvinced by the potentially low investment returns of their pension pots and dismayed by the low annuities on offer when they finally do retire, will somehow see the solution to all this lies in a personal pension from a bank.
Now, one knows why the ABI are so keen to see the introduction of a basic advice regime. It wants to see banks continue to distribute its members’ products, simple as that. To that end, it is prepared to accept a vast number of potential casualties among millions of consumers who, if previous widely-documented experiments by the FSA are anything to go by, are at risk of massive mis-selling if such a regime is introduced.
But why has Sinclair thrown his organisation’s lot in with the ABI? A clue lies in a sentence of his article in Money Marketing, where he describes how poorly-qualified advisers would be able to basic advice as a “bridge to deliver the advisers of the future at the more senior level”.
He adds: “However it might also allow mortgage advisers who choose this route to provide more holistic solutions to a broader population.”
In other words, thousands of QCF Level 4 certified advisers – and millions of consumers – must pay so that Sinclair’s under-qualified members can do more than sell mortgages. Sounds like self-interest disguised as public interest.
Nic Cicutti can be contacted at firstname.lastname@example.org